With the recent economic downturn, the most severe recession since the Great Depression, credit counselors and bankruptcy trustees have been kept busy by the many people who have found themselves unable to deal with their mounting debt. Those who have filed for bankruptcy or entered into a consumer proposal with a bankruptcy trustee are forbidden from obtaining credit for several years. When you have no more credit, you have no choice but to exercise financial responsibility and not overspend.

Studies have shown that people will spend more when they pay for something by a means other than cash. Cash has a fixed value, whereas a credit or debit card can be anything, so when you hand over cash, it\’s gone and it\’s not coming back until you earn more. How much money you have becomes divorced from your spending of it when you use plastic to pay for something. It becomes easy to overspend your budget, and you don\’t experience the consequences until you\’re deep into debt.

Staying on track with your budget doesn\’t happen by accident. You\’ve got to have a plan. There\’s an easy way to stick to that plan: cash jars or envelopes.

Getting it started is simple. The first thing to do is figure out a budget for a month. Add up your take-home income in a typical month. Next, add up your fixed expenses, like housing payments, car expenses, and debt repayments; all those expenses that regular and predictable.

With your bills taken care of, the remainder is what you spend on living expenses, like food, clothing, transportation and entertainment. Now calculate how you slice up the rest of the pie and distribute it among each category. Convert the monthly figures to weekly amounts, and put the cash in the jar or envelope.

It may occur to you that the ends of weeks and months don\’t always line up with each other. In fact, they seldom do. With any budget figures, you can work out the equivalents by converting everything to an annual amount, and then dividing by 12 to get the monthly amount, and by 52 to get the weekly amount.

Computers will make your calculations easier, especially if you have basic knowledge of spreadsheet software. If that\’s not an option, it\’s just as effective to write your budget on paper. If the prospect of doing basic math is a turn-off, you need to get over that. You need to be able to count your money before you spend it.

Using a system of cash jars or envelopes is effective is that it sets those limits that using credit cards seems to take away. Spending money becomes a tangible activity, and you don\’t have the option of spending what you don\’t have. You are forced to evaluate between needs and wants, and the consequences of your spending are felt more immediately.

If you have filed for bankruptcy, entered into a consumer proposal agreement with a bankruptcy trustee, or have simply sought credit counselling for your debt problems, a cash-based system like this will likely be the prescription for your spending issues. But you\’ll be glad you made the transformation. Learning how to stabilize your finances is a significant achievement.

Call the experienced and friendly bankruptcy Cambridge trustees, dedicated to helping people regain control of their lives and find financial security.

Call the experienced and friendly bankruptcy Cambridge trustees, dedicated to helping people regain control of their lives and find financial security.
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Author Bio: Call the experienced and friendly bankruptcy Cambridge trustees, dedicated to helping people regain control of their lives and find financial security.

Category: Finances
Keywords: bankruptcy,debt,credit,counselling,money,finance,family,personal,management,life,home,shopping